Australian firm buys stake in Town Center company

ByMegan Workman

Forest City Enterprises, Inc., co-owner of the Charleston Town Center mall, and an Australian-based investment firm signed a $2 billion deal Monday that will give the owner more money to invest in the eight properties included, pay down debt and expand, a company spokesman said.

Jeff Linton, senior vice president of corporate communication for Forest City, said the joint venture will give QIC, one of the largest institutional investment firms in Australia, a one-fourth ownership in Charleston Town Center.

The Australian firm and Cleveland, Ohio-based Forest City agreed to form joint ventures owned by both companies, which will transfer ownership of eight Forest City malls.

The combined value of the eight malls, including Charleston Town Center, is $2.05 billion.

Linton said under the agreement, Forest City will contribute its ownership share in each of the eight properties to the joint venture. QIC will pay cash for 49 percent of those interests and Forest City will hold a 51 percent ownership, he said.

Sales of the eight malls average $500 per square foot, on a rolling 12-month basis, according to Forest City.

The mall owner expects to generate $330 million in cash liquidity, "a generous" amount, after the transaction closes, Linton said.

David J. Larue, Forest City president and chief executive officer, said in a news release the agreement "demonstrates the tremendous value of these properties."

"We are pleased to partner with QIC, an experienced global investor, to invest in and enhance these strong retail centers," Larue said. "This is another example of our strategy of securing strategic capital partners to invest with us in both existing assets and new opportunities."

Forest City will be the managing member of the individual joint ventures. The company will continue to be responsible for leasing, operations, marketing, financing, development services and asset management of the properties.

At Charleston Town Center -- where ownership is shared equally between Forest City and the Cafaro Co. - Forest City will contribute its half ownership to the joint venture with QIC.

Cafaro, of Youngstown, Ohio, will still own its portion of the Charleston mall while its existing partner will continue to manage daily operations, Linton said.

The partnership connects Forest City with a major global investor that is expanding its footprint in the U.S., Linton said.

Steven Leigh, managing director of QIC Global Real Estates, said the investment firm is "pleased" to partner with Forest City in an effort that is a "natural progression" for the Australian company.

"The joint venture with Forest City Enterprises for investment in the portfolio of eight, high-quality retail assets represents a significant opportunity for QIC to further expand into the United States with a successful retail operator and is part of our long-term investment strategy," Leigh said in a news release.

Forest City plans to raise money through the agreement to renovate and expand four malls, pay off debt and invest in other improvements.

The four malls the company plans to renovate with its new assets are: Galleria at Sunset in Henderson, Nev.; Antelop Valley Mall in Palmdale, Calif.; Short Pump Town Center in Richmond, Va.; and South Bay Galleria in Redondo Beach, Calif.

Forest City spent $7 million to completely overhaul the Charleston Town Center's flooring, railing and other facilities last year as part of its 30-year anniversary.

Linton said the transaction will not have an effect on Town Center shoppers.